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Recent Changes to Property Disclosure Act Will Affect Residential Real Estate Contracts

Recent Changes to Property Disclosure Act Will Affect Residential Real Estate Contracts

By James F. Burdi & Phillip Hornberger

On September 22, 2023, Governor Hochul signed into law a significant change in the Property Condition Disclosure Act (PCDA), effective March 20, 2024, eliminating an opt-out provision that favored sellers. It’s important for real estate agents, buyers, and sellers to be aware of this change.

The PCDA was created in 2001, to afford buyers of residential real estate information about the property they were buying, including among many other things:

  1. Structural condition of the dwelling
  2. Legality of structures (Certificates of Occupancy)
  3. Presence of hazardous waste or hazardous materials
  4. Claims of adjoining owners
  5. Infestation by termites or other wood-destroying insects
  6. Condition of mechanical systems and roofs

Prior to the enactment of the PCDA, New York subscribed to the doctrine of “Caveat Emptor” (Let the Buyer Beware). Buyers were free to have home inspections done pre-contract, but for the most part purchased their homes in “as is” condition, with only such representations and warranties as they could negotiate.

This is still the case in New York, but the PCDA is designed to give buyers information needed to make informed decisions in homebuying.

Under the existing law, these disclosures are made in a 48-item Property Condition Disclosure Statement (PCDS). Sellers are required to complete and deliver the Statement prior to the signing of a binding contract.

The new disclosure form has been expanded, particularly regarding flood zone disclosure, with seven detailed questions relating to potential flood zone and flood insurance issues, for a total of 55 questions.

The penalty for not providing a PCDS has been a $500 credit, given to the buyers by the sellers at closing. The penalty is so minimal in relation to the risk of answering a question incorrectly and subjecting one’s self to liability, that sellers have overwhelmingly elected to give the credit rather than answer the questions.

Under the new law, this option will no longer be available. Sellers subject to the law will have no opt-out alternative.

The statute affects sales of 1–4-family residential properties. Sales of condominiums or co-operative units remain exempt from the statute, as are sellers who are fiduciaries (executors, administrators, or trustees).

Sellers and their real estate agents should familiarize themselves with the disclosure form before listing any property that is subject to the law. As soon as the form becomes available for circulation, we will add it to this post and send out a notice.

The statute is explicit that sellers are under no obligation to undertake any investigation or inspection of their property, or to check any public records, in order to accurately complete the form. But in some cases, it may be in the seller’s best interest to do so.

Most of the questions can be answered “unknown,” but it may not always be enough. Courts sometimes impute knowledge, ruling that a person “knew or should have known” a fact or circumstance.

Although the PCDA is more than 20 years old, the application of imputed knowledge to the PCDS has not been tested in court, at least not in the New York metropolitan area, due to almost universal use of the credit.

The new amendment to the PCDA will no doubt have a considerable impact on how residential real estate sales are negotiated in New York State. Our residential real estate team is ready to assist you with any questions.


James Burdi is a partner in VMM's Wills, Trusts, and Estates and Elder Law practices, concentrating in Trust and Estate Planning and Administration. He heads the firm’s Special Needs Planning and Adulting 101℠ subpractices and is a member of the Real Estate practice. He can be reached at jburdi@vmmlegal.com and 516.437.4385 x130.

Phillip Hornberger is an associate in VMM’s Real Estate and Business and Transactional Law practices, with a focus on residential real estate. He can be reached at phornberger@vmmlegal.com and 516.437.4385 x104.